Whether large gold discoveries destabilized economies with inflation in the past would require a huge effort in determining the relationship of yields vs. inflation and the track of the gold price. Since gold was fixed, the only other example we have is silver, which fell out of use as a standardized form of money.

A really excellent chart on that relationship is available in the 10-year T-bond yield minus inflation(scroll down a bit)

http://www.nowandfutures.com/forecast.html#predict_gold

By
STATISTICIAN

02/23/2009 7:26PM

No one will ever corner the gold market. Hunt Brothers tried silver. Almost did it. Lawyers changed the rules by govt. action. Broke Hunts’ play. Gold held by too many ideologically challenged people, banks and countries. Gold mined makes world richer. Don’t agree with comment below that discoveries 100 years ago destabilized gold. World needs capital. Gold is capital. Look what FRD price change in 1934 did for production and stability.

By
FranSix

02/23/2009 9:57AM

I'm glad to see the debate unfold and some historical perspective applied here.

One thing I would like to add is that in the last 40 years, gold has been abolished as money. Many gold mining projects have faced chronic corrections in the gold price as a result.

But prior history shows that gold was chosen as a monetary asset due to its perceived stability. (it only become unstable as large discoveries flooded markets 100 years ago.)

I would presume that this perception of stability is returning to gold as an asset, given the nature of the breakdown of financial assets, especially those associated with sovereign debt. The availability of gold is in decline, since no new discoveries of large gold deposits are know to exist.

A market corner is possible in gold, much as it had occurred in the oil price last year, though its still some time in the future. With a continuous rise in the gold price against all assets a central bank fix in the price of gold is also possible. (I assume it would be around $5k/oz. to eventually see a zero knocked off currencies around the world.)

I suppose the way to advance for this company would be to ensure that its shares are traded both in the pink sheets and the CDN venture exchanges. So far, its impossible to get a quote as the shares are unlisted.

I don't think labour availability is really a problem if you have subcontracted labour as you would in the forestry sector.

By
Hans Kummerow

02/16/2009 6:22AM

Rick and bluejay -

I agree with both you.

Let's get rid of the debt while gold prices are still near record highs.
And then let's go ahead and rebuild the collection on debt-free terms.

By
Rick

02/15/2009 5:33PM

First, thanks for writing back Hans.

Second, Bluejay, as always, direct and to the point.

I am encouraged that the current collection is now on sale as individual pieces. I've brought this up, many times, that the collection is worth selling (whole or in pieces)to establish a new solvent direction, debt-free to create a new collection that may just surpass what is current.

Let's remember that the current collection of gold specimens was accomplished with balanced books.

By
bluejay

02/15/2009 11:14AM

Our corporate vessel has a leak in it. We need to fix the leak before we can move on with anything else. We need to eliminate our debt and stop our shareholder blood letting in the form of continuing counterproductive interest payments. Until the board accomplishes this, I think discussing technology will prove to be futile.

The country is in the very beginnings of another Great Depression. Will the board please wake up and smell the coffee.

By
Hans Kummerow

02/15/2009 5:23AM

Here is my reply, Rick.

In the first place - I am not offended at all, Rick. We are all expressing opinions and here is my opinion in more detail.

In my judgement, the most cost effective way to exploit the Allegheny Vein System would be to repeat the success, that was achieved in the mid-nineties with the arrival of electro-magnetic detection devices.

Technological progress has been made since then. And more will be made in the future. It should now be possible, to create detection devices with a larger range and an improved signal recollection.
That is one approach that I would like to see pursued.

As soon as better detection gear becomes available, the neccessary funds for further development can be raised by collecting more gold inside the existing workings and selling them in the market-place. As bullion or gold-laced quartz-cristals or any other marketable form.

That is what I mean by relying on own forces. Let us pitch in our talents and skills to create better detection gear and put it to use without a lot of capital expense.

I'll check again tomorrow to see, if that has answered your question, Rick.

By
Rick

02/14/2009 8:04PM

Hans, it's instructive that you are reading our responses. In case you didn't notice, allow me to point out that I, for one, disagree with your notion that wiating on the sidelines has any merit at all.

I'm sorry if that possibly offends, please understand that it is not meant personally.

It just didn't make sense to me. For the mine and investors to wait around, as perhaps you read in my previous comments, one has to wonder...wait for what?

Let's move ahead instead.
I'd like to ask you and hope you answer:

Given the historical success in both recovery/ton and this mine's unique potential, why did you write what you did?

By
Hans Kummerow

02/14/2009 1:33AM

I would like to thank every writer for presenting his own view on the subject of cost-control in hard rock mining in the Allegheny Mining District and how to best exploit this truely amazing vein system.

Relying on own possiblilities is a successful strategy in difficult times. Don't spend money or pledge valuable assets against credit. Rely on own talent.

Get rid of existing debt that might strangle the property as soon as gold prices start to decline for some unforeseen and unlikely reason.

And wait for better chances to raise capital for new develepments from proceeds of the mine itself.

If the only thing that used to be sure at the Origsix in the past, was the fact that the next winter season will arrive, there may be another thing that will prove true in the future as well. Technological change will happen.

By
STATISTICIAN

02/11/2009 8:41PM

Hans, don’t know where to begin but here’s a start. Development is the answer for the Sixteen to One mine. Working capital is the issue, not line item costs.

There is no known gold deposit on earth more richly endowed with gold than the Alleghany Mining district in California. It’s focus is a long lasting producing company of consolidated mines with reported production from 1854 to the present (over 1.5 million ounces), mines with different claim names but all included in this small northern district under one ownership. You must read and study two important statistics that Mike posted under the NEWS heading: “What is a High-Grade Gold Mine” and “High-Grade Pockets Found in California”.

Let me start your study with “What is a High-Grade Gold Mine” first. The numbers span a twenty-year history of only high-grade reported production. The percentage column shows the percentage of total production came from separated high-grade. The remainder of gold (to 100%) came from the low-grade mill run. Look at the first two columns, total ounces and pounds of ore. It is POUNDS OF ORE! It is not tons of ore. The grade is 1.25 ounces per pound! Not tons! This grade computes to 2,500 ounces per ton. The great major gold producers today measure their gold assay at grams per ton. A grade of .03 per ton brings them bragging smiles. Wow, the Big Boys only needs to mine 100 tons to get an ounce of the yellow stuff. A 100 tons of ore at the Sixteen to One statistically yields two million five hundred thousand ounces of gold. One ounce can be found in less than a pound of ore.

The size of all the high-grade ore during the twenty year span is about sixty tons. These miners break about fifteen to twenty tons per round, depending of the ground. The second column shows the actual ounces of gold for that year from high-grade or 165,512 ounces of fine (.999) gold. Statistically the twenty-year production could come from four days of mining. Well, that is very unlikely or is it?

Study that chart. Put dollars to the numbers and then today even at a gold price approaching the $1000 per ounce stratosphere, this Sixteen to One gold has a market value far greater than the spot price. (Mike doesn’t mention this too much but specimens bring two to ten times spot and the gemstone market sometimes brings more.)

Is this just a crazy dream of people, sometimes called gold bugs? Has all the gold from the mines owned by Original Sixteen to One Mine been mined already? For the answer, ask any geologist familiar with the property. Now go to NEWS and look at “High-Grade Pockets Found in California”. Number one was over 83,000 ounces. It is right off the 800-foot level. In fact the miners walk or ride past this pocket regularly. Mike doesn’t publicize everything about the mine. How could he, there is so much information; but maps are available that show the trends of the pockets, the size and more. A dreamer, no; a visionary, no; a trained eye can make credible projections about the future for mining in this one of a kind high-grade gold mine. If anyone doubts this, look at the notable gentlemen who financed or worked in Alleghany, who succeeded in finding gold. Gold bugs? Humbug, they were businessmen, adventurers and gold miners.
Statistician

By
bluejay

02/10/2009 11:10PM

Today I listened to Jim Rogers state on a recent YouTube interview that because capital markets are so tight that it will be another 13 to 14 years before a major mine is constructed again.

With the government intent of capping the gold price in the $920 to $925 area, how much longer will it be before the $1000 area is breached again when general attitudes about investing in gold mines chnages to positive?

With the DOW Jones Averages appearing to lose footing in the 7900 to 8000 area, it appears gold stocks, because they are stocks, may suffer if the DOW suddenly starts cascading downstream again. What I am saying is enthusiasm for investing in gold stocks may take a hit in the coming weeks, to a month or two.

I don't believe we can rely on outside help until gold gets firmly placed over $1000 an ounce or until the gold shares move much higher. Too much propaganda has been pushed against gold and gold shares as an investment by the banking controlled media.

Why can't we get contract labor back in the mine and cut these guys in for a percentages of their finds?Also, let's lower our selling prices on our gold specimens to market levels where transactions can take place in an attempt at reducing our debt and getting labor back in the mine hunting for gold again.

By
Rockroby

02/10/2009 10:23AM

Rick
I agree,we need to get the stock moving in the marketplace.If people see more movement they will go to the website,see the gold this mine can produce and maybe say hey I want to own a piece of this mine.If given the chance Mike can and will find the biggest pocket ever found in the mine.Lets give him that chance he deserves it.The stock went up .24 cents a share today lets get in their and put in bids & tell all your friends to do the same.
Thanks

By
Rick

02/09/2009 5:51PM

This latest discussion on cost anaysis, new innovation robotics, yet-to-be-proven and still conceptual modern metal detection devices, side-line sitting (perish the thought) all bring to light a huge question that I need some help understanding:

How is it that many millions of dollars, and actually millions of ounces of highgrade gold, have been mined from the veins of the Original Sixteen to One vein system, whether micro-vein or the thirty-foot foot-wall to head-wall potential...how did this happen without all these new theories?

It seems to me that the best cost-control is to go mining NOW, the effective way the mine has historically been successful. Get in there, break rock, muck, break more rock to find the pocket, use the best technology now available to identify the most beautiful gold-in-quartz on the planet, bring it up and cheer; go back, do it again, true methods in place.

It has baffled me that investment potential must be sitting (waiting?) on the sidelines for something better to come along. The double-jack did the job and nobody was sitting around waiting for pneumatic drills. The true potential is just sitting there with an amazing successful historical outcome for all to see.

When (not if) technology advances and more cost-effective method shows itself as a viable alternative, upgrade.

This procrastination is like wondering if the baby should ever need to have a bath...and waiting around to see if someone can come up with a better bathtub.

By
Mark Wolff

02/09/2009 11:56AM

My understanding is that management has embraced advances in metal detection for some time now as an R&D priority, perhaps having already run up against practicality limits. Sophisticated technology like robotics, to be differentiated from remote-operator control (available now), won’t come knocking at the door…such innovation arises from necessity, a compelling reason to change the way things are done. In the presence of inexpensive substitutes and entrenched industry practice, the hardrock niche remains too small to warrant expectations of a complete, integrated solution anytime soon.

An analogous situation plays out before our eyes now in the debate over economic stimulus measures. Billions in aid for ‘education’ is the issue, brick-and-mortar capital projects to create jobs and train people for better jobs, etc., yet our leaders ignore the carbon footprint aspect to bringing students to such schools each day in order to learn, and more importantly, that for a decade now, jobs have been going to places like China and India where the Internet enables folks to sit in virtually on lectures given at MIT or Harvard by the very best at their discipline. Does anyone hear calls from Washington for developing home-study via Internet as a serious alternative to hiring more ‘teachers’ and building more classrooms? It would seem that teacher’s unions and vested interests will prevail, our newly minted graduates left to wonder at competitive realities which ‘outsource’ brain power from abroad, much as is the case too in resource extraction labor economics.

My recommendation is to aggressively pursue solutions conceptually, relative to specific challenges at the 16-to-1. My other recent posts on the ‘thin veins’ thread about thermal fragmentation methods as an alternative provide bait for the curious, even as the veins at Alleghany may be 30 ft. thick in places. A couple of years back I wrote to Mike and he phoned back to discuss remote-operator controlled methods, something clearly beyond budget practicality at the time, yet as things are with ‘maintenance’ status at the mine, necessity as mother of invention begins with finding better ways, which in themselves could attract investor attention.

Rather than give away the shop posting more tech ticklers on this forum, it would be nice to see if this thread can stimulate discussion regarding strategic investments in R&D as a managerial imperative over incremental production targeting, towards maximizing shareholder value. Now that zero-emissions monitoring standards couple with worker safety ‘best methods’ practice as socially responsible investment criteria, especially in today’s capital markets, anything less remains clouded by perceptions of unpalatable risk, which is why Origsix languishes in need of capital infusions. Beyond defensive measures, per your suggestion, to protect and ready the 16-to-1 for beneficial innovation to come, contemplating such alternatives available today also makes sense, doesn’t it, in seeking data useful in arriving at meaningful cost/benefit capitalization estimates for future production scaling via creative new application solutions, as a way of amortizing anticipated R&D over longer terms?

If you build it, they will come, and like Tom Sawyer’s fence in need of whitewashing, players will arrive for their own reasons, if management is clever in forging alliances with component providers who clearly perceive a positive stake in expanding their markets to the underground. If it’s the sizzle, not the steak, of reserves holdings facing ready markets offered up by management today, why not try adding tech innovation as a more familiar entrée to the back burner, or should that be the one up front? Investor appetite for geologic risk is renown, measured still in g/ton and share prices, and so it also goes with such estimates of market size and share, so remove the unsavory other risks from the mix with improved designs, and capital should arrive to make a meal of your core asset, tempted too by demonstrated leadership in innovation and ancillary revenue potentials from commercialization of promising ideas elsewhere.

By
Hans Kummerow

02/06/2009 9:57PM

The Drill-Blast-Muck sequence is a well-proven but labour-intensive way of mining. The feast or famine experience in following a vein may yield a rewarding experience for true gold-bugs on a team of share-holders, managers and miners. It is not the type of investment that people will want to get into, who are weighing the odds of r.o.i. strictly on the basis of cost and yield expectations.

In my judgement, the best bet for Origsix to control the cost of future gold-production in the Allegheny Vein System would be to wait for significant improvements in technology - namely non-destructive gold detection technologies over larger distances and remote-control mining robots.

In the meantime focus on eliminating debt and interest payments through the sale of all assets exept the land and the production and processing equipment.

Go into hibernation status and stay on the maintainance only mode until a major technological break-through surfaces. It may be just around the corner.

By
FranSix

02/03/2009 9:15AM

Part of the problem at present is viewing labour as a liability, imo. Certainly there are liabilities in operating machinery that breaks down chronically in a mine, mostly due to rock chemistry.

The primary driver of an anti-labour culture is the collapse in value of the currency. Labour is 'worth less' because the value of that productivity has declined, not because those performing the task at hand are inherently faulty, or a perceived 'workers conspiracy.' If anything managements are obdurate and work to rule by comparison.

An interesting macro economic is forming, though should currency firm under deflation along with gold prices. This favours a labour solution.

Thank you for the suggested reference, I will look it up.

By
Mark Wolff

02/02/2009 3:45PM

Am surprised at your attention to labor vs. automation economics, Fransix, after your inquiry about robotics. Thin veins by nature challenge the economics of driving a stope big enough for people and heavy equipment to access profitably, so Rocmec is advancing a new standard for mine architecture in working DOWN on narrow-vein deposits, reducing gange rock removal costs by up to an order of magnitude. Please be sure to look at their website .pdf about how this approach lowers labor and other mine overheads.

Over it's useful life, capital equipment such as a conveyor belt vs. manned mucking can easily beat Paul Bunyan at the bottom line, also eliminating risk from unfortunate safety incidents which keep labor overheads high here in CA. As with mainframe computer makers during the advent of PC's, the larger players who have tested automated approaches seek to protect their R&D and price their equipment accordingly, so small hardrock operators can only await someone to integrate things underground on a PC platform, to function as do automated warehouses above-ground. Skilled workers will always be needed to service equipment and perform geologic evaluations, yet the advantage to 24/7 production scheduling around those constraints using remote operators remains compelling, many new job definitions to come about eventually.

Any perceived 'intensity' is merely a measure of the vacuum of awareness being filled suddenly: here's another clue...search 'microwave drill' to see promising test results in cutting rock via these means. Could an array of recycled oven magnetrons weighing but a few pounds come to substitute for jackhammers? The notion of cutting stopes just wide enough to accommodate metal detectors, leaving in place barren ores, has great appeal as a way to minimize the amount of material which must exit the portal for processing.

Thermal methods are touted within independent studies as capable of reducing overall industry energy consumption by as much as 50%, so the better mousetrap has arrived given multiple economic incentives. Mines like the 16-to-1 which languish in need of attention from capital markets may find newly curious investors if such cures are embraced, yet are Catch-22ed so far as raising funds for R&D along high-tech lines. Our tiny market niche has yet to garner attention from equipment vendors towards mineral resources invisible to balance-sheet recognition as things stand in conventional mining due to perceived risk, a hurdle which will continue to send capital towards open pit and offshore projects until, as in the halcyon days of mining innovation a century ago, someone simply builds and demonstrates the innovation.

These posts are meant to attract attention from parties wishing to conduct operational risk/reward audits to updated 'state of the art' technical assessments at individual mines (each is different), with a goal of bringing together all who share a vested interest in seeing high-tech products emerge soon to above-and-beyond safety and environmental standards. To your point on perhaps reassessing the role of labor relative to enhanced means, it's all about how you view the problems when thinking in terms of human resources. As an example, hearing problems are unavoidable in mines, and much grant money is available to come up with ways to prevent hearing loss underground beyond headphones, the 'state of the art', yet nowhere is such funding support available for integrated solutions to remove workers to quiet working environs outside the portal via networked remote-control means.

Some may say this is due to reasons political, to protect skilled mining jobs, but in truth it's because networking tech is off-the-shelf now, grant money for that spent decades back at the dawn of the Internet. The underground will always carry avoidable risks, but how hard will labor with it's vested interests, or governments push to change the status quo? Is the future there really so difficult to imagine when hardrock 'tech' has remained essentially frozen for the last 50 years?

By
FranSix

02/02/2009 8:50AM

Wow. Very intense, Mark!

From my own experience, I can attest to a niche labour market in the resource sector which can provide workers capable of doing the same work without resorting to using mechanized production methods where physical labour is warranted.

I have worked in the silviculture on contracts in B.C. and Alberta and I can vouch for this group of labourers who can produce far in excess of the light standards you would find in the larger society and urbanized areas. Of course, they make a lot more, but they produce more:

If the problem is labour, then a reassessment of the labour cost vs. productivity equation has to be assumed to make narrow vein mines work.

F6

By
Mark Wolff

01/31/2009 1:19PM

This forum topic can achieve considerable depth, as FranSix seeks technological alternatives to conventional mining practice. As a new contributor with years working the conceptual side of how to eliminate environmental and labor risk concerns leveraging IT advances within narrow vein settings, it is possible to say there are solutions, many proprietary, that can be integrated now 'off the shelf' to achieve this end. Let's tackle the basic question first.

The ancient Egyptians used fire and water to heat and shatter ores, and recently a Canadian junior, Rocmec Mines, has been championing a variant of this thermal fragmentation approach in conventional mine settings. Good information at their website regarding this, yet they use diesel as fuel...not something that will fly in CA near water tables. Such means would tend to destroy specimen occurrences as at the 16 to 1, yet as an upside, ores removed by thermal methods are 'pre milled' to an extent in being shattered already, easier to liberate values from. As far back as the 1960's, Russian miners have employed microwaves to improve yields on certain refractory ores, and obviously lasers can make precise cuts in stone, too.

Heat is your answer, but where does the 'sweet spot' lie along the electromagnetic spectrum? What new safety concerns or regulatory exposures emerge from a given choice? One thing for certain...to install and manipulate remotely a gas torch or other lightweight heat emitter beats attempting to automate heavy equipment or drill assemblies, even as that approach has been demonstrated successfully in certain larger mining operations.

Remote 'green' mining is a holy grail to small, independent operators, yet anathema to those threatened by the notion of 'skilled' mining jobs being replaced by unskilled operators working a deposit from home or outside the portal. No where but in mining is the irony so readily apparent of advances in IT having failed to extend to production methods, as workers needlessly continue to die underground. New jobs need to be created now, and my business agenda is to offer up tangible solutions that circumnavigate regulatory concerns by design, TODAY.

My own demonstration project at mines in CA and CO with support from a major networking vendor and bank financing was derailed last summer as credit markets froze, still ready to go if any readers wish to pursue business discussions. Kudos to Mike and all at the 16-to-1 for the many arrows they have taken trying to keep alive our proud mining heritage; better to pioneer new methods elsewhere rather than attract additional regulatory scrutiny arrows within that production setting. Any effort to address and resolve safety/emissions concerns via innovation opens the door to investor attention a bit further, benefiting this moribund industry segment as it returns to visibility among financial players.